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Woman drains ex’s retirement account

By Barbara Whelehan · Bankrate.com
Friday, December 7, 2012
Posted: 5 pm ET

Divorce is a tough experience, but such hardship doesn't cut you any slack if you don't stay on top of your retirement paperwork, as one poor fellow discovered.

Imagine this scenario: After 11 years of marriage, you and your spouse call it quits and you move out of the house. After you leave, a letter from your former employer is delivered to the house that your ex now resides in. The envelope is clearly marked: "To be opened by addressee only." Your ex opens it and discovers there's a new procedure in place to access your retirement funds online. After following the procedures, your ex drains the account in four months.

This happened to William Foster of Tulsa, Okla. He lost $42,126.38 altogether -- and didn't even find out about it until January of the following year, when he received a tax form from the plan provider reporting a distribution of that amount. Foster sent a letter to his former employer's plan administrator, "claiming potential fraud, as I did not request withdrawal from my plan and I did not authorize any disbursement from this plan," according to court documents.

The 10th U.S. Circuit Court of Appeals concurred with a district court's ruling that the plan was not at fault because it doesn't have to insure against wrongful actions by third parties, according to PlanSponsor.com. The court found that the plan isn't under any obligation to pay the benefits twice "because of William Foster's failure to comply with his obligations to ensure the plan had his correct address," according to the report.

Foster neglected to notify his former employer, where he hadn't worked for the previous six years, of his change of address. And now he's out 42 grand.

From the PlanSponsor article by Rebecca Moore:

The court found that the employer and plan did nothing wrong. The decision to process account withdrawals was based on receipt of a procedurally sound request. According to the court's opinion, Foster was fully informed of how the plan would allow him access to his money, and that someone with the correct User ID and PIN would be treated as the legal participant for purposes of processing withdrawals.

Foster failed to notify the plan of his new address until 15 months following his split from his wife. In the meantime, the plan mailed a document to the Foster home describing changes in how participants would access their accounts. It included an explanation of how a User ID created by the participant would replace the Social Security number for identification purposes. Foster's ex-wife received the document and made an online request to put in place a new User ID, which the plan confirmed in April 2005. The following month, she changed the account password, changed the listed permanent address to a post office box and withdrew $4,000 from the account. During the next several months, she drained the account.

Anyone is capable of this type of oversight. Let's learn from this poor guy's mistake and stay on top of our retirement planning paperwork, no matter what may be going on in our lives.

What do you think? Should the court have ruled differently? Should the plan provider cough up his money?

***

Follow me on Twitter: BWhelehan.

Correction: A previous version of this post identified the plaintiff as Michael Foster. His name is actually William Foster.

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636 Comments
Joel
February 03, 2013 at 7:56 am

Regarding this post by Meemie777: I cant believe that this story made it in the news. Why the hell dsecribe in detail how a person can do this. If you state it was written to warn ppl.about how to stop this from happening to you, thats a sad day. I would much rather this story not be brought to anyones attention, now NOONE is safe, since you did publish this story!!!!!!

How could anyone describe exactly how NOT to let something happen to you if not describing WHAT happened? The more detailed the better. Foretold is forewarned. You could as easily be described as an advocate of this crime because you don't want anyone to know how to prevent it from happening to themselves.

abn bama fan
February 02, 2013 at 8:39 am

These are examples of "Cheaper to keep her" argument. It is also a glaring example of why people should pay more attention to their finances-see effects of LT-unemployment, irresponsible government fiscal discipline- lack of financial oversight never turns out pretty and then the help of others is required.

Terry
February 01, 2013 at 6:08 pm

Depending on the laws of the state they lived in, she may be entitled to 50% if they were still married at the time of her taking the money. If they were completely divorced, I don't think she would be entitled to anything of his, in which case she actually stole his retirement and should be tried for a felony theft and put in prison unless she returns it. Most women who do this kind of thing will stash the money somewhere and wait to see if the ex does anything about it. She hasn't committed any crime if he doesn't report it stolen to the police. Just letting the ex-employer know he didn't authorize it doesn't ensure that the right people are notified. Men do this more often than women. They don't think "the little woman" will do anything to his funds like bank accounts, savings, 401K, etc. but she could have been your best friend during the marriage but after a divorce, there are women who will steal their money, burn their clothes, sell their golfing and/of fishing equipment, and anything else they can think of. Never underestimate a woman scorned.

Gerald
February 01, 2013 at 5:38 pm

I think the womanis guilty of identity theft and should be prosecuted.

Meemie777
January 31, 2013 at 9:41 pm

I cant believe that this story made it in the news. Why the hell dsecribe in detail how a person can do this. If you state it was written to warn ppl.about how to stop this from happening to you, thats a sad day. I would much rather this story not be brought to anyones attention, now NOONE is safe, since you did publish this story!!!!!!

Fred
January 30, 2013 at 10:22 pm

All the Civil courts care about "Child Support"..

joanne
January 29, 2013 at 10:40 pm

How can that not be thief she forged his name drained his account and got away with it plane and clear makes one wonder if the judge was done that way would he have to suck it up too i agree with Chris

louie ursua
January 18, 2013 at 11:53 am

MY WIFE OF 35YRS MARRIAGE DIVORCED ME FOR ANOTHER COP OR COPS. SHE HAS USED MY S.S. # TO OBTAIN OVER $80,00.00 IN CREDIT BY SAYING SHE LIVED AT MY D NEVER GAVE ME RETIREMENT. SHE IS ENTITLED T RAILROAD RETIREMENT WHEN SHE IS 62. HOW ABOUT ME?? OOK ME OFFF PART B 2 MONTHS EARLT, NOW I HAVE TO PAY. SHE RETIRED CA. CORECCTION INSTITUTE PRISON@TEHACHAPI ANPD. OME. 3CREDIT AGENCIES,F.T.C. AND BANKRUPTCY JUDGE INVESTIGATING HER. SHE RETIRED C.C.I AND NEVER GAVE ME PART RETIREMENT,NOTHING. WHAT AM I ENTITLED TOO. SHE WILL GET RAILROAD RETIREMENT WHEN 62YRS, HELP

Joel
January 17, 2013 at 4:44 pm

As a military divorcee, I've found my ex-spouse's *NEW* post-divorce address (that I've never resided in!) in various important databases for me. Not totally related to this case but I really wonder how this could happen...

In this case he should be suing his ex-spouse since she committed mail fraud (as Chris rightly pointed out). Of course, that's not much help if she spent all the money and doesn't work! The old saying "you can't suck blood from a turnip" comes to mind.

Chris
January 17, 2013 at 2:23 pm

How is this not mail fraud? She opened mail that clearly stated "to be opened by addressee only". Everything else that happened flows from that one action. She knowingly took what was not hers. That money would be part of the consideration for the divorce settlement, wouldn't it, as part of an "equitable distribution" settlement?

If I didn't get satisfaction in the courts, I would figure out other ways.